​Robots become a reality as IAG takes first step in digital direction

Cost-cutting plans outlined at Insurance Australia Group (IAG) are the clearest indication yet that digital transformation strategies across the country are coming to fruition, as businesses reinvent processes and operations.

As digital ambitions become a reality, the insurance giant has unveiled initiatives designed to save more than $250 million a year by 2019, as the organisation seeks to replace workers with robots, streamline systems and embrace technological innovation.

“We don’t know any specific numbers yet,” Milliner explained. “There’ll be programs at work that come from automation and robotics that will make it a more efficient organisation. Overall, there will be less people at IAG in the future.”

Milliner’s stance comes as the company takes advantage of machine learning and data analytics capabilities, evident through the upcoming launch of a new $75 million venture capital fund in January.

As outlined during a market strategy update, IAG will invest primarily in latter-stage start-ups, in a bid to extract new insights from entrepreneurs amidst sizeable technological change.

“We are specifically looking at investments that will bring us new and innovative sources of data to help us better understand customers, in areas such as cyber security, Internet of Things, financial data aggregation and risk management,” a company spokesperson told the Australian Financial Review.

“We're also interested in propositions that have the potential to impact or alter the insurance value chain, including artificial intelligence, machine learning, robo-advice and technologies that are related to driverless vehicles.”

IAG’s approach follows a “transformation year” for the industry, as executives challenge themselves to reinvent the organisation for 2017 and beyond.

“CIOs know they need to make their businesses more digital, but many IT leaders are taking deliberate steps to get there,” Gartner senior vice president and global head of research, Peter Sondergaard, said.

“In the fast-paced digital business world, CIOs must get more nimble, and speed up their initiatives.

“This is a year in which we really need to take all the digital initiatives and pilots, and drive them into the mainstream of the business. We need to get off our horse of just piloting, and we have to get into the real stuff.”

IAG’s bold stanch in the market has been backed by fellow analyst firm, Morgan Stanley, with Daniel Toohey outlining to the AFR that the business ”seemed well placed to navigate the minefield of opportunities from technology-driven change".

In aligning with machine learning, artificial intelligence and data analytics, IAG represents a company already embarking on digital transformation plans, with 35 per cent of organisations expected to follow suit in 2017, exploring the use of robots to automate operations by 2019.

“Technological development in artificial intelligence, computer vision, navigation, MEMS sensor, and semiconductor technologies continue to drive innovation in the capability, performance, autonomy, ease of use, and cost-effectiveness of industrial and service robots,” IDC research director, Dr. Jing Bing Zhang, said.

By 2019, Dr Zhang believes 30 per cent of commercial service robotic applications will be in the form of a "Robot-as-a-Service" business model, reducing costs for robot deployment.

As a result, 30 per cent of businesses are expected to respond by implementing a chief robotics officer role in the same year, defining a robotics-specific function within the business.

Specific to the channel, both partners and customers will have a greater choice of vendors as new players enter the $US80 billion ICT market to support robotics deployment by 2020, with 60 per cent of robots set to depend on cloud-based software to define new skills, cognitive capabilities, and application programs, leading to the formation of a robotics cloud marketplace.

“Robotics will continue to accelerate innovation, thus disrupting and changing the paradigm of business operations in many industries,” Dr Zhang added.

“We encourage end-user companies to embrace and assess how robotics can sharpen their company's competitive edge by improving quality, increasing operational productivity and agility, and enhancing experiences of all stakeholders.”

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